EXHIBIT 99.1
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LIMITED LIABILITY COMPANY AGREEMENT
OF
KINGSPARK LLC
A DELAWARE LIMITED LIABILITY COMPANY
DATED AS OF JANUARY 2, 2001
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TABLE OF CONTENTS
PAGE
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SECTION 1. Formation of Limited Liability Company..........................................................1
SECTION 2. Name............................................................................................1
SECTION 3. Definitions.....................................................................................1
SECTION 4. Business of the Company.........................................................................3
SECTION 5. Term............................................................................................3
SECTION 6. Principal Place of Business.....................................................................3
SECTION 7. Registered Agent; Registered Office.............................................................3
SECTION 8. Capital Contributions; No Withdrawal or Resignation.............................................3
(a) Initial Capital Contributions...................................................................3
(b) Additional Contributions; Interest..............................................................4
(c) Liability for Promised Contributions............................................................4
(d) Withdrawal and Resignation; Return of Capital Contribution......................................4
SECTION 9. Distributions...................................................................................4
SECTION 10. Allocation of Income and Losses.................................................................4
(a) Allocations.....................................................................................4
(b) Change in Membership Interests..................................................................4
(c) Qualified Income Offset.........................................................................5
(d) Special Rules...................................................................................5
(e) Allocations of Non-Recourse Liabilities and Minimum
Gain Chargeback.................................................................................5
SECTION 11. Withholding.....................................................................................5
SECTION 12. Books, Records and Accounting...................................................................6
(a) Books and Records...............................................................................6
(b) Fiscal Year; Accounting.........................................................................6
(c) Reports.........................................................................................6
SECTION 13. Company Funds...................................................................................6
SECTION 14. Management......................................................................................6
(a) Manager; Power and Authority....................................................................6
(b) Specific Authority..............................................................................7
(c) Performance of Manager's Duties.................................................................7
(d) Expenses Incurred by Manager....................................................................9
(e) Resignation; Removal............................................................................9
(f) Limitations on Powers...........................................................................9
SECTION 15. Meetings........................................................................................9
(a) Meetings of Members.............................................................................9
(b) Consent of Members.............................................................................10
SECTION 16. Voting.........................................................................................10
(a) Members........................................................................................10
(b) Voting.........................................................................................10
(c) Actions Requiring Member Approval..............................................................10
SECTION 17. Limitation of Liability and Indemnification....................................................10
(a) Limitation of Liability........................................................................10
(b) Indemnification................................................................................11
(c) Expenses.......................................................................................11
(d) Not Exclusive..................................................................................12
(e) Insurance......................................................................................12
(f) Exculpation....................................................................................12
SECTION 18. Assignment of Membership Interests and New Members.............................................13
(a) Assignment.....................................................................................13
(b) Limitations on Assignment......................................................................13
(c) New Members....................................................................................13
SECTION 19. Dissolution....................................................................................13
SECTION 20. Winding Up and Distribution of Assets..........................................................14
(a) Winding Up.....................................................................................14
(b) Distribution of Assets.........................................................................14
SECTION 21. Conflict of Interest...........................................................................14
SECTION 22. Taxation.......................................................................................15
(a) Status of the Company..........................................................................15
(b) Tax Elections..................................................................................15
(c) Company Tax Returns............................................................................15
(d) Tax Audits.....................................................................................15
SECTION 23. Not a Publicly Traded Partnership..............................................................16
SECTION 24. Miscellaneous..................................................................................17
(a) Governing Law..................................................................................17
(b) Binding Effect.................................................................................17
(c) Pronouns and Number............................................................................17
(d) Captions.......................................................................................18
(e) Enforceability.................................................................................18
(f) Counterparts...................................................................................18
(g) Notices........................................................................................18
(h) Entire Agreement; Amendment....................................................................18
(i) Further Assurances.............................................................................18
(j) Third Parties..................................................................................18
(k) Facsimile Signatures...........................................................................18
(l) Reliance upon Books, Reports and Records.......................................................18
(m) Time Periods...................................................................................19
(n) Waiver.........................................................................................19
SCHEDULE I.................................................................................................21
LIMITED LIABILITY COMPANY AGREEMENT
OF
KINGSPARK LLC
This
Limited Liability Company Agreement is made and entered into as of
the 2nd day of January, 2001 by and among the Members listed on Schedule I
attached hereto.
SECTION 1. Formation of Limited Liability Company. The Members agree to
the formation of a limited liability company (the "Company") pursuant to the Act
and for that purpose have caused a Certificate of Formation to be filed with the
Secretary on December 28, 2000. The rights and duties of the Members shall be as
provided in the Act, except as modified by this Agreement. For and in
consideration of the mutual covenants herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Members executing this Agreement hereby agree to the terms and
conditions of this Agreement, as it may from time to time be amended according
to its terms. To the extent any provision of this Agreement is prohibited or
ineffective under the Act, this Agreement shall be considered amended to the
smallest degree possible in order to make this Agreement effective under the
Act. In the event the Act is subsequently amended or interpreted in such a way
to make any provision of this Agreement that was formerly invalid valid, such
provision shall be considered to be valid from the effective date of such
interpretation or amendment.
SECTION 2. Name. The business of the Company shall be conducted under
the name "Kingspark LLC".
SECTION 3. Definitions.
For purposes of this Agreement, unless the context clearly indicates
otherwise, the following terms shall have the following meanings:
(a) "Act" means the
Delaware Limited Liability Company Act,
Delaware
Code Title 6, Sections 18.101 et seq., as amended from time to time. -- ---
(b) "Agreement" means this
Limited Liability Company Agreement, as
amended, modified or supplemented from time to time.
(c) "Capital Account" means, with respect to each Member, the account
established on the books and records of the Company for such Member. Each
Member's Capital Account shall initially equal the value of the Capital
Contribution to the Company made by the Member as set forth on Schedule I
attached hereto. During the term of the Company, each Member's Capital Account
shall be (i) increased by the amount of (w) income and gain
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allocated to the Member and (x) any cash or property subsequently contributed by
the Member to the Company, and (ii) decreased by the amount of (y) loss and
deduction allocated to the Member and (z) all cash and property distributed to
the Member, and shall otherwise be kept in accordance with applicable United
States Treasury Regulations promulgated under Section 704(b) of the Code.
(d) "Capital Contribution" means the total amount of cash or other
property contributed to the Company, or services rendered to the Company, by a
Member. Contributed property shall be valued at fair market value, net of any
liabilities assumed to which the contributed property is subject. The Capital
Contribution of each Member is set forth on Schedule I as the same shall be
amended, modified or supplemented from time to time to reflect additional
Capital Contributions after the date hereof.
(e) "Code" means the United States Internal Revenue Code of 1986, as
amended, modified or rescinded from time to time, or any similar provision of
succeeding law.
(f) "IRS" means the United States Internal Revenue Service or any
successor entity.
(g) "Majority Interest" means more than 50% of all Membership
Interests.
(h) "Manager" means Xxxxxxxxx or any Person who is elected as a
substitute Manager in accordance with this Agreement.
(i) "Member" means any Person with a Membership Interest in the
Company.
(j) "Membership Interest" means the percentage interest in the Company
of a Member as set forth opposite such Member's name on Schedule I attached
hereto as amended, modified or supplemented from time to time.
(k) "Net Cash Flow" means for any period the amount, computed on a cash
basis, equal to:
(i) the sum of (A) gross receipts from business operations,
all investment income and investment gain of the Company and all other
cash received by the Company (including the proceeds from loan
refinancings), all without double counting and (B) any amounts released
from Reserves;
decreased by:
(ii) the sum of (A) disbursements of the Company for operating
expenses, expenditures for capital investments and reinvestments,
principal payments on indebtedness, interest and other expenses,
including any repayment of indebtedness
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required or elected to be made in connection with any refinancing, sale
or other event, and (B) any increase in Reserves.
(l) "Person" means any individual, corporation, partnership,
association, limited liability company, trust, estate or other enterprise or
entity.
(m) "Reserves" means the reasonable reserves established and maintained
from time to time in amounts reasonably determined by the Members to be adequate
and sufficient for current and future operating and working capital and to pay
for taxes, insurance, service of indebtedness, amortization of indebtedness,
repairs, replacements or renewals, management fees or other costs and expenses
incident to the Company's business or otherwise to provide for the long-term
goals of the Company or any other purpose, including reserves for unforeseen or
contingent liabilities, debts or obligations.
(n) "Secretary" means the Secretary of State of
Delaware.
(o) "Treasury Regulations" means the income tax regulations, including
any temporary regulations, from time to time promulgated under the Code.
SECTION 4. Business of the Company. The purpose of the Company is to
carry on any lawful business, purpose or activity for which limited liability
companies may be formed in accordance with Section 18-106 of the Act.
SECTION 5. Term. The term of the Company shall begin upon the filing of
the Certificate of Formation with the Secretary. The Company shall have
perpetual existence, unless dissolved in accordance with the provisions of this
Agreement.
SECTION 6. Principal Place of Business. The principal place of business
of the Company shall be located at 00000 Xxxx 00xx Xxxxx, Xxxxxx, Xxxxxxxx
00000. The Manager may, from time to time, change the principal place of
business of the Company and/or establish additional places of business of the
Company.
SECTION 7. Registered Agent; Registered Office. The registered agent
for the service of process shall be the Corporation Service Company. The
registered office of the Company in the State of
Delaware shall be c/o
Corporation Service Company, 0000 Xxxxxx Xxxx, Xxxx xx Xxxxxxxxxx, Xxxxxx of New
Castle. The Manager may, from time to time, change the registered agent or
office through appropriate filings with the Secretary.
SECTION 8. Capital Contributions; No Withdrawal or Resignation.
(a) Initial Capital Contributions. Each Member shall make or be deemed
to have made the Capital Contribution set forth opposite such Member's name on
Schedule I attached
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hereto and shall receive the Membership Interest set forth opposite such
Member's name on such Schedule concurrently with the closing of the transactions
contemplated by the Purchase and Sale Agreement to be entered into among
Kingspark Holding S.A., Kingpark Holdings LLC, the Company and
ProLogis Trust.
(b) Additional Contributions; Interest. No Member shall be obligated to
make any additional Capital Contribution. Upon any additional Capital
Contribution made by any Member, the Membership Interests of the Members shall
be adjusted accordingly and shall be set forth on an amendment to Schedule I
attached hereto. No Member has any obligation to restore a deficit balance in
such Member's Capital Account or to make any contributions to the Company in
order to restore such deficit balance. No Member shall be paid interest on any
Capital Contribution.
(c) Liability for Promised Contributions. A Member is obligated for
promises to make Capital Contributions, even if the Member is unable to perform
because of death, disability, or any other reason. If a Member does not make the
Member's required contribution of services or property, the Member is obligated,
at the option of the Company, to contribute cash equal to the value of the
required contribution.
(d) Withdrawal and Resignation; Return of Capital Contribution. No
Member shall be entitled to withdraw or resign as a Member or to receive any
part of such Member's Capital Contribution or any distribution from the Company
in connection therewith.
SECTION 9. Distributions. Net Cash Flow shall be distributed among the
Members in accordance with their respective Membership Interests from time to
time as determined by the Manager. In the event the Company is subject to any
tax or other obligation which is attributable to the interest of one or more
Members in the Company, but fewer than all the Members, such tax or other
obligation shall be specially allocated to, and charged against the Capital
Account of, such Member or Members, and the amounts otherwise distributable to
such Member or Members pursuant to this Agreement shall be reduced by such
amount.
SECTION 10. Allocation of Income and Losses.
(a) Allocations. Items of income, gain, loss, deduction, credit and tax
preference to be allocated among the Members shall be allocated in accordance
with their respective Membership Interest.
(b) Change in Membership Interests. If there is a change in any
Member's Membership Interest during any year, allocations among the Members
shall be made in accordance with their Membership Interests in the Company from
time to time during such year in accordance with Section 706 of the Code using
the closing-of-the-books method, except that depreciation, amortization and
similar items shall be deemed to accrue ratably on a daily
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basis over the entire year during which the corresponding asset is owned by the
Company for the entire year, and over the portion of a year after such asset is
placed in service by the Company if such asset is placed in service during the
year.
(c) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations or distributions described in Sections
1.704-1(b) (2) (ii) (d) (4), 1.704-1(b) (2) (ii) (d) (5), or 1.704-1 (b) (2)
(ii) (d) (6) of the Treasury Regulations, and after giving effect to the
allocations required under Sections 10(a) and 10(d) hereof, such Member has a
Capital Account deficit, items of income and gain shall be specially allocated
to such Member in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, its Capital Account deficit created by
such adjustments, allocations or distributions as quickly as possible.
(d) Special Rules.
(i) If any Company asset has a book value different than its
adjusted tax basis to the Company for federal income tax purposes
(whether by reason of the contribution of such property to the Company,
the revaluation of such property hereunder or otherwise), allocations
of income, gain, loss, deduction, credit and tax preference under this
Section 9 with respect to such asset shall take account of any
variation between the adjusted tax basis of such asset for federal
income tax purposes and its book value in the manner prescribed by
Section 704(c) of the Code or the principles set forth in Section
1.704-1(b)(2)(iv)(g) of the Treasury Regulations, as the case may be,
using the traditional method without curative or remedial allocations.
(ii) Items of income, gain, loss, deduction, credit and tax
preference for state and local income tax purpose shall be allocated to
and among the Members in a manner consistent with the allocation of
such items for federal income tax purposes in accordance with the
foregoing provisions of this Section 10.
(e) Allocations of Non-Recourse Liabilities and Minimum Gain
Chargeback. Allocations attributable to non-recourse liabilities shall be made
consistent with Section 1.704-2 of the Treasury Regulations including the
minimum gain chargeback requirement of Section 1.704-2(f) of the Treasury
Regulations.
SECTION 11. Withholding. The Company is authorized to withhold from
distributions to be made to a Member, or with respect to allocations to a
Member, and to pay over to a federal, state or local government, any amounts
required to be withheld pursuant to the Code or any provisions of any other
federal, state or local law. Any amounts so withheld shall be treated as
distributed to such Member pursuant to this Section 10 for all purposes of this
Agreement and shall be offset against the net amounts otherwise distributable to
such Member. The Company may also withhold from distributions that would
otherwise be made
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to a Member, and apply to the obligations of such Member, any amounts that such
Member owes to the Company. In addition, any tax imposed upon the Company
resulting from the Membership Interest of any Member shall be treated as a
distribution to such Member and shall reduce future distributions of Net Cash
Flow to such Member.
SECTION 12. Books, Records and Accounting.
(a) Books and Records. The Company shall maintain complete and accurate
books and records of the Company's business and affairs in accordance with
generally accepted accounting principles, consistently applied. The books and
records shall be maintained at the principal place of business of the Company
and shall be accessible to the Members in accordance with the Act.
(b) Fiscal Year; Accounting. The Company's fiscal year shall be the
calendar year. The accounting methods and principles to be followed by the
Company shall be selected from time to time by the Manager.
(c) Reports. The Company shall provide to the Members reports
concerning the financial condition and results of operation of the Company and
the Members' Capital Accounts within ninety (90) days after the end of each
fiscal year.
SECTION 13. Company Funds. The funds of the Company shall be deposited
in such bank or other financial institution account or accounts, or invested in
such interest-bearing or non-interest-bearing investments, as shall be
designated by the Manager. All withdrawals from any such bank accounts shall be
made only by the Manager or by individuals duly appointed by the Manager.
SECTION 14. Management.
(a) Manager; Power and Authority . The management and control of the
Company and its business shall be vested exclusively in the Manager, and,
subject to the following proviso, the Manager shall have all of the rights,
powers and authority generally conferred under the Act or other applicable law,
on behalf and in the name of the Company, to carry out any and all of the
objects and purposes of the Company and to perform all acts and enter into,
perform, negotiate and execute any and all leases, documents, contracts and
agreements on behalf of the Company that the Manager, in his discretion, deem
necessary or desirable; provided, however, that (i) the Manager shall at all
times comply with the provisions of Section 14(c) and (ii) the exercise of such
rights and powers shall be subject to Section 16. The consent or authorization
of any Member shall not be required for any lease, document, contract,
agreement, mortgage or promissory note to be the valid and binding obligation of
the Company.
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(b) Specific Authority. Without limiting the generality of Section
14(a) and subject to the terms of Section 14(c) and Section 16 hereof, all
Members agree that the Manager shall, in its discretion, have the following
rights and powers, except to the extent such rights and powers may be limited by
other provisions of this Agreement:
(i) the making of any expenditures incurred in connection with
the business of the Company;
(ii) the use of the assets of the Company in connection with
the business of the Company;
(iii) the negotiation, execution and performance of any
contracts, conveyances or other instruments;
(iv) the distribution of Company cash other than as required
pursuant to any other provisions of this Agreement;
(v) the selection and dismissal of officers, employees, agents
and outside attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment or
hiring;
(vi) the maintenance of insurance for the benefit of the
Company and the Members;
(vii) the control of any matters affecting the rights and
obligations of the Company, including the conduct of litigation and the
incurring of legal expense and the settlement of claims and
litigations;
(viii) the indemnification of any person against liabilities
and contingencies to the extent permitted by law;
(ix) borrowing money, guaranteeing indebtedness and other
liabilities and issuing evidence of indebtedness on behalf of the
Company, including, without limitation, negotiating and executing all
notes, mortgages and other documents and certificates in connection
with such financing; and
(x) the filing on behalf of the Company of all required local,
state and federal tax returns and other documents relating to the
Company.
(c) Performance of Manager's Duties. In the course of their management
of the Company, the Manager shall at all times comply with the following
provisions unless such compliance shall have been waived in accordance with the
provisions of Section 16:
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(i) The Manager shall cause the Company to (A) maintain its
existence as a limited liability company and its license or
qualification and its good standing in the State of
Delaware and in
each other jurisdiction in which its ownership or lease of property or
the nature of its business makes such license or qualification
necessary and (B) obtain and maintain all other licenses, permits,
franchises and governmental authorizations necessary to conduct its
business and own its property;
(ii) The Manager shall cause the Company to duly pay and
discharge all liabilities to which it is subject or which are asserted
against it, promptly as and when the same shall become due and payable,
including all taxes, assessments and governmental charges upon it or
any of its properties, assets, income or profits, prior to the date on
which penalties attach thereto, except to the extent that such
liabilities, including taxes, assessments or charges, are being
contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserves (including reserves
for any additional amounts which would be payable as a result of the
failure to discharge timely any such liabilities) or other appropriate
provisions, if any, as shall be required by generally accepted
accounting principles shall have been made; but only to the extent that
failure to discharge any such liabilities would not result in any
additional liabilities which individually and in the aggregate would
constitute a material adverse effect on the Company;
(iii) The Manager shall cause the Company to comply with the
terms and provisions of each judgment, law, statute, rule, and
governmental regulation applicable to it and each contract, mortgage,
lien, lease, indenture, order, instrument, agreement, or document to
which it is a party or by which it is bound, the failure to comply with
which, whether considered individually or when aggregated with all
other failures, is likely to have a material adverse effect on the
Company; provided, however, that the Manager shall have the right to
cause the Company to contest the imposition of such laws, rules,
regulations, court orders, decrees and governmental agency orders if
such contest is made in good faith and diligently pursued by proper
proceedings, adequate reserves with respect thereto have been
established in accordance with generally accepted accounting
principles, and such contest could not reasonably be expected to have a
material adverse effect on the Company;
(iv) The Manager shall cause the Company to maintain, with
financially sound and reputable independent insurers, insurance with
respect to its properties and business against loss or damage of the
kinds customarily insured against by Persons engaged in the same or
similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons;
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(v) The Manager shall not cause the Company to make, issue, or
become liable on any guaranty, liability, surety or other agreement to
become or remain liable with respect to any obligation or liability of
any other Person;
(vi) The Manager shall not cause the Company (A) to create,
incur, assume or suffer to exist any indebtedness for borrowed money or
other transactions having the commercial effect of a borrowing of money
in an amount in excess of $250,000 or (B) make any expenditures in an
amount in excess of $100,000 except or in connection with trade
payables or contractual obligations to suppliers, customers or others
incurred in the ordinary course of business of the Company;
(vii) The Manager shall not cause the Company to enter into
any agreement which would prohibit or contractually restrict the
Company from making distributions, in cash or otherwise, with respect
to the Capital Accounts or Membership Interests of the Members or
otherwise restricting the Company's ability to make payments to the
Members; and
(viii) The Manager shall not cause the Company (A) to incur
legal expenses or to settle any claims or litigation in an amount in
excess of $250,000 or (B) in connection with any legal expenses or any
settlement of claims or litigation in an amount in excess of $250,000.
(d) Expenses Incurred by Manager. The Manager shall be reimbursed by
the Company for any reasonable out-of-pocket expenses incurred by the Manager on
behalf of the Company.
(e) Resignation; Removal. A Manager may resign at any time by giving
written notice to all Members. The resignation of a Manager that is also a
Member shall not cause such Member to cease to be a Member solely by reason
thereof. A Manager may be removed at any time, with or without cause, by the
unanimous vote of the Members. The Members, by unanimous vote, may elect a
substitute Manager.
(f) Limitations on Powers. The Manager shall not have any power, right
or authority to take any action requiring Member approval as set forth in
Section 16 hereof in the absence of the requisite Member approval.
SECTION 15. Meetings.
(a) Meetings of Members. Meetings of Members for any proper purpose may
be called at any time by any Member or Members whose Membership Interest(s)
equal or exceed 50%. Members may participate in any meeting through the use of a
conference telephone or similar communications equipment by means of which all
individuals participating in the meeting can hear each other, and such
participation shall constitute presence in person at the
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meeting. The Company shall give written notice of the date, time, place and
purpose of any meeting to all Members at least ten (10) days and not more than
sixty (60) days prior to the date fixed for the meeting. Notice may be waived by
any Member.
(b) Consent of Members. Any action required or permitted to be taken at
any annual or special meeting of Members may be taken by a written consent
without a meeting, without prior notice and without a vote. The written consent
shall set forth the action so taken and shall be signed by Members having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all Members entitled to vote thereon were
present and voting. Prompt notice of the taking of action by written consent
shall be given to all Members who did not sign the written consent.
SECTION 16a Voting.
(a) Members. The affirmative vote or written consent of a Majority
Interest shall decide all matters properly brought before the Members.
(b) Voting. A Member may vote either in person or by written proxy or
consent signed by the Member or by his duly authorized attorney in fact.
(c) Actions Requiring Member Approval. Notwithstanding any other
provision of this Agreement, the affirmative vote or written consent of a
Majority Interest shall be required to approve the following matters:
(i) The dissolution or winding up of the Company;
(ii) The merger or consolidation of the Company;
(iii) The sale, exchange, mortgage, pledge, encumbrance,
lease or other disposition or transfer of all or
substantially all of the assets of the Company;
(iv) The declaration of any payment or distributions; and
(v) Amendments to this Agreement.
SECTION 17. Limitation of Liability and Indemnification.
(a) Limitation of Liability. Except as otherwise provided by
nonwaivable provisions of the Act, the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company, and no Member shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member. Except as otherwise expressly required by
law,
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no Member, in its capacity as Member, shall have any liability to the Company in
excess of (i) the amount of its Capital Commitment, (ii) its obligation to make
other payments expressly provided for in this Agreement, and (iii) the amount of
any distributions wrongfully distributed to such Member.
(b) Indemnification. The Company shall indemnify, in accordance with
and to the full extent now or hereafter permitted by law, any Person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, an action by or in the right of
the Company) by reason of the fact that such Person is or was a Member, Manager
or officer of the Company (and the Company may so indemnify a Person by reason
of the fact that such Person is or was an employee or agent of the Company, or
is or was serving at the request of the Company as a director, trustee, member,
manager, officer, employee or agent of another limited liability company,
corporation, partnership, joint venture, trust or other enterprise), against any
liabilities, expenses (including, without limitation, attorneys' fees and
expenses and any other costs and expenses incurred in connection with defending
such action, suit or proceeding), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such Person in connection with
such action, suit or proceeding, provided the Company shall not indemnify any
such Person (i) for fraud, intentional misconduct, knowing violation of the law
or gross negligence, or (b) for any transaction for which such Person received a
personal benefit in violation or breach of any provision of this Agreement. Any
indemnification under this Section 17 shall be made by the Company only as
authorized in the specific case upon a determination that indemnification of
such Person is proper in the circumstances because such Person has met the
applicable standard of conduct set forth herein. Such determination shall be
made by the Members who are not parties to such action, suit or proceeding or,
if there are no such Members or if such Members so direct or if such Person
seeking indemnification so requests, by independent legal counsel (which
independent legal counsel shall be reasonably satisfactory to the Members) in a
written opinion. "Other enterprise" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a Person with
respect to an employee benefit plan; and references to serving at the request of
the Company shall include, without limitation, any service as a Member, Manager,
officer, employee or agent of the Company or any other entities in which it has
an ownership interest which imposes duties on, or involves services by, such
Member, Manager, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries.
(c) Expenses. Expenses (including, without limitation, attorneys' fees
and expenses) incurred by a Member, Manager, officer, employee or agent of the
Company in defending a civil, criminal, administrative or investigative action,
suit or proceeding shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the Member, Manager, officer, employee or agent to repay such
amount if it shall ultimately be determined that such Member, Manager, officer,
employee or agent is not entitled to be indemnified by the Company under this
Section 17 or under any other contract or agreement between such Member,
Manager, officer,
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employee or agent and the Company. Such expenses (including attorneys' fees)
incurred by employees or agents of the Company or persons serving other entities
at the request of the Company shall be so paid upon the receipt of the aforesaid
undertaking and such terms and conditions, if any, as the Manager deems
appropriate.
(d) Not Exclusive. The indemnification and advancement of expenses
provided by this Section 17 shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any by-law, agreement, vote of Members or otherwise, both as to action in
such Person's official capacity and as to action in another capacity while
holding such office, and shall continue as to a Person who has ceased to be a
Member, Manager, officer, employee or agent and shall inure to the benefit of
the successors, assigns, heirs, executors and administrators of such a Person.
(e) Insurance. The Company may purchase and maintain insurance on
behalf of any Person who is or was a Member, Manager, officer, employee or agent
of the Company, or is or was serving at the request of the Company as a
director, trustee, member, manager, officer, employee or agent of another
limited liability company, corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against such Person and incurred
by such Person in any such capacity, or arising out of such Person's status as
such, whether or not such Person would be entitled to indemnity against such
liability under the provisions of this Section 17.
(f) Exculpation. Without limiting any rights of the Company to pursue
claims against Persons other than the Manager, a Manager shall not be liable,
responsible or accountable to the Company or the Members for monetary damages in
connection with any act or omission performed or omitted by such Manager in good
faith on behalf of the Company and within the scope of the authority conferred
on the Manager by this Agreement unless such act or omission was performed or
omitted (i) fraudulently, (ii) not in good faith, (iii) with gross negligence,
(iv) pursuant to intentional misconduct or a knowing violation of law, or (v) in
material breach of this Agreement. A Manager will be deemed to have acted in
good faith if he relies on advice of independent accountants, legal counsel, or
any other unaffiliated experts or professionals who have been selected
reasonably by the Manager and in accordance with any applicable provisions of
this Agreement.
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SECTION 18 Assignment of Membership Interests and New Members.
(a) Assignment. A Membership Interest shall not be assignable in whole
or in part, except as expressly provided in this Agreement. An assignment of a
Membership Interest shall not entitle the assignee to become or to exercise any
rights or powers of a Member until such assignee is admitted as a Member in
accordance with this Agreement. As a condition to any assignment of a Membership
Interest, the Member must notify the assignee and the Company in writing of all
obligations of such Member for liabilities relating to the Company and this
Agreement, including any obligations to make contributions to the Company. An
assignment shall entitle the assignee only to receive such distributions, to
share in such profits and to receive such allocations of income, gain, loss,
deduction, credit, tax preference and similar items to which the assignor was
entitled to the extent assigned.
(b) Limitations on Assignment. No Member may assign any Membership
Interest (or any portion thereof or interest therein), and no Person shall
become a Member, unless in the opinion of counsel selected by or acceptable to a
Majority Interest of the non-assigning Members, such action will not subject the
Company to federal income taxation as an association taxable as a corporation,
terminate the Company pursuant to Section 708(b) of the Code or violate
applicable state or federal securities laws. Any attempted action in
contravention of this Section 18(b) shall be void and of no force or effect.
(c) New Members. A Person, including, without limitation, an assignee
of a Membership Interest, shall be admitted as a Member only upon (i) the
written consent of all other Members, which consent may be granted or withheld
in the sole and absolute discretion of each Member whose consent is required
hereby and (ii) the execution by such Person of this Agreement. Until the
assignee of a Membership Interest is admitted as a Member, the assignor, subject
to the last sentence of Section 18(a), shall continue to be a Member.
SECTION 19. Dissolution.
The Company shall be dissolved and terminated upon the happening of the
first to occur of any of the following events:
(a) The expiration of the term of the Company;
(b) The approval or written consent of a Majority Interest of the
Members for the dissolution or winding up of the Company;
(c) The death, retirement, withdrawal, resignation, expulsion,
bankruptcy (as defined in Section 18-304 of the Act) or dissolution of a Member
or Members or the occurrence of any other event that terminates the continued
membership of such Member or Members in the Company, unless within ninety (90)
days of such occurrence the Company is continued by
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the written consent of a majority of the remaining Membership Interests, which
consent may be granted or withheld in the sole and absolute discretion of each
Member whose consent is required hereby. The Company shall automatically
continue without any action on the part of the Members upon the death,
retirement, withdrawal, resignation, expulsion, bankruptcy (as defined in
Section 18-304 of the Act) or dissolution of a Member or other event which
terminates the continued membership of a Member until the Company is otherwise
dissolved and terminated pursuant to the terms of this Agreement; and
(d) Judicial dissolution pursuant to the Act.
SECTION 20. Winding Up and Distribution of Assets.
(a) Winding Up. If the Company is dissolved, the Manager, or if there
be no Manager, any Person designated by the holders of a Majority Interest,
shall wind up the affairs of the Company.
(b) Distribution of Assets. Upon the winding up of the Company, the
Manager, or if there be no Manager, any Person designated by the holders of a
Majority Interest, shall pay or make reasonable provision to pay all claims and
obligations of the Company, including all costs and expenses of the liquidation
and all contingent, conditional, or unmatured claims and obligations that are
known to the Members but for which the identity of the claimant is unknown. If
there are sufficient assets, such claims and obligations shall be paid in full
and any such provision shall be made in full. If there are insufficient assets,
such claims and obligations shall be paid or provided for according to their
priority and, among claims and obligations of equal priority, ratably to the
extent of assets available therefor. Any remaining assets shall be distributed
as follows:
(i) First, to creditors, including Members in their
capacities as creditors, in the order of priority as
provided by law; and
(ii) Second, to Members in accordance with their
respective positive Capital Accounts, after giving
effect to all contributions, distributions and
allocations for all periods.
SECTION 21. Conflict of Interest. Neither of the Members nor the
Manager shall be required to act hereunder as its sole and exclusive business
activity and any such Person may have other business interests and engage in
other activities in addition to those relating to the Company. Neither the
Company, the Manager nor any Member shall have any right by virtue of this
Agreement in or to any other interests or activities or to the income or
proceeds derived therefrom. A Member and the Manager may transact business with
the Company and, subject to applicable laws, has the same rights and obligations
with respect thereto as any other Person. No transaction between or among the
Manager, a Member and the Company shall
14
be voidable solely because a Member or the Manager has a direct or indirect
interest in the transaction.
SECTION 22. Taxation.
(a) Status of the Company. The Members acknowledge that this Agreement
creates a partnership for federal and state income tax purposes (and only for
such purposes), and hereby agree not to elect to be excluded from the
application of Subchapter K of Chapter 1 of Subtitle A of the Code or any
similar state statute.
(b) Tax Elections. The Tax Matters Member (as defined below) shall,
upon the written request of any Member benefitted thereby, cause the Company to
file an election under Section 754 of the Code and the Treasury Regulations
thereunder to adjust the basis of the Company assets under Section 734(b) or
743(b) of the Code and a corresponding election under the applicable sections of
state and local law. The Tax Matters Member shall have the authority to make all
other Company elections permitted under the Code, including elections of methods
of depreciation.
(c) Company Tax Returns. The Company shall cause the necessary federal
income and other tax returns and information returns for the Company to be
prepared. Each Member shall provide such information, if any, as may be needed
by the Company for purposes of preparing such tax returns and information
returns. The Company shall deliver to each Member within ninety (90) days after
the end of each fiscal year a copy of the federal income tax returns for the
Company as filed with the appropriate taxing authorities, and upon the written
request of any Member, a copy of any state and local income tax return as filed.
(d) Tax Audits.
(i) K. Xxxx Xxxxxxxxx shall be the Company's tax matters
Member (the "Tax Matters Member") with respect to federal income tax
audits. If at any time the Tax Matters Member cannot or elects not to
serve as the Tax Matters Member, is removed by the Members as the Tax
Matters Member or ceases to be a Member, a Majority Interest of the
Members shall select another Member to be the Tax Matters Member. The
Tax Matters Member, as an authorized representative of the Company,
shall direct the defense of any claims made by the IRS to the extent
that such claims relate to the adjustment of Company items at the
Company level. The Tax Matters Member shall promptly deliver to each
Member a copy of any notice of beginning of administrative proceedings
or any report explaining the reasons for a proposed adjustment received
from the IRS relating to or potentially resulting in an adjustment of
Company items. The Tax Matters Member shall, unless a Majority Interest
consents to the contrary, diligently and in good faith contest any
proposed adjustment of a
15
Company item that principally affects the Members at the administrative
and judicial levels, including, if appropriate or if requested by a
Majority Interest, appealing any adverse judicial decision, and shall
consider in good faith any suggestions made by any Member or its
counsel regarding the conduct of such administrative or judicial
proceedings. The Tax Matters Member shall keep each Member advised of
all material developments with respect to any proposed adjustment that
come to its attention, including, without limitation, the scheduling of
all conferences and substantive telephone calls with the IRS. Each
Member shall be entitled, at its own expense, to attend all meetings
with the IRS and to review in advance any material written information
(including, without limitation, any pleadings, memoranda or similar
items) to be submitted to the IRS. Without first obtaining the consent
of a Majority Interest, the Tax Matters Member shall not, with respect
to any proposed adjustment of a Company item that materially and
adversely affects any Member, enter into a settlement agreement that
purports to bind Members other than the Tax Matters Member (including,
without limitation, any stipulation consenting to an entry of decision
by any tax court), or enter into an agreement or stipulation extending
the statute of limitations.
(ii) The Company shall promptly deliver to each Member a copy
of all notices, communications, reports or writings of any kind with
respect to income or similar taxes received from any state or local
taxing authority relating to the Company that might materially and
adversely affect each Member, and shall keep such Members advised of
all material developments with respect to any proposed adjustment of
Company items that come to its attention.
(iii) Each Member shall continue to have the rights described
in this Section 22(d) with respect to tax matters relating to any
period during which it was a Member, whether or not it is a Member at
the time of the tax audit or contest.
SECTION 23. Not a Publicly Traded Partnership. All interests in the
Company have been or will be issued in a transaction or transactions that were
not required to be registered under the Securities Act of 1933 (the "1933 Act").
No admission (or purported admission) of a Member, and no transfer (or purported
transfer) of all or any part of a Member's interest in the Company (or any
economic interest therein) in the Company, whether to another Member or to a
person who is not a Member, shall be effective, and any such admission or
transfer (or purported admission or transfer) shall be void ab initio, and no
person shall otherwise become a Member if (i) at the time of such admission or
transfer (or purported admission or transfer) any interest in the Company (or
economic interest therein) is traded on an established securities market or
readily tradeable on a secondary market or the substantial equivalent thereof or
(ii) after such admission or transfer (or purported admission or transfer) the
Company would have more than 100 Members. For purposes of clause (i) of the
preceding sentence, an established securities market is a national securities
exchange that is either
16
registered under Section 6 of the Securities Exchange Act of 1934 (the "1934
Act") or exempt from registration because of the limited volume of transactions,
a foreign securities exchange that, under the law of the jurisdiction where it
is organized, satisfies regulatory requirements that are analogous to the
regulatory requirements of the 1934 Act, a regional or local exchange, or an
interdealer quotation system that regularly disseminates firm buy or sell
quotations by identified brokers or dealers by electronic means or otherwise.
For purposes of such clause (i), interests in the Company (or interests therein)
are readily tradeable on a secondary market or the substantial equivalent
thereof if (i) interests in the Company (or interests therein) are regularly
quoted by any person, such as a broker or dealer, making a market in the
interests; (ii) any person regularly makes available to the public (including
customers or subscribers) bid or offer quotes with respect to interests in the
Company (or interests therein) and stands ready to effect buy or sell
transactions at the quoted prices for itself or on behalf of others; (iii) the
holder of an interest in the Company has a readily available, regular, and
ongoing opportunity to sell or exchange such interest (or interests therein)
through a public means of obtaining or providing information of offers to buy,
sell, or exchange such interests; or (iv) prospective buyers and sellers
otherwise have the opportunity to buy, sell, or exchange interests in the
Company (or interests therein) in a time frame and with the regularity and
continuity that is comparable to that described in clauses (i), (ii) and (iii)
of this sentence. For purposes of determining whether the Company will have more
than 100 Members, each person indirectly owning an interest in the Company
through a partnership (including any entity treated as a partnership for federal
income tax purposes), a grantor trust or an S corporation (each such entity a
"flow-through entity") shall be treated as a Member unless the Manager
determines in its sole and absolute discretion that less than substantially all
of the value of the beneficial owner's interest in the flow-through entity is
attributable to the flow-through entity's interest (direct or indirect) in the
Company.
SECTION 24. Miscellaneous.
(a) Governing Law. This Agreement and any controversies, claims or
arbitration hereunder shall be governed by and construed in accordance with the
laws of the State of
Delaware, without regard to its conflict of law rules.
(b) Binding Effect. Except as otherwise specifically provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties and
their legal representatives, heirs, administrators, executors, successors and
assigns.
(c) Pronouns and Number. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
17
(d) Captions. Captions or section headings contained in this Agreement
are inserted only as a matter of convenience and in no way define, limit or
extend the scope or intent of this Agreement or any provision hereof.
(e) Enforceability. If any provision of this Agreement, or the
application of the provision to any Person or circumstance shall be held
invalid, the remainder of this Agreement, or the application of that provision
to Persons or circumstances other than those with respect to which it is held
invalid, shall not be affected thereby.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
(g) Notices. Any notices permitted or required under this Agreement
shall be deemed to have been given when delivered in Person or by courier or
three (3) days after being deposited in the United States mail, postage prepaid,
and addressed to the Company at its principal place of business and to any
Member at the address reflected on the books and records of the Company.
(h) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters set forth
herein and supersedes all prior understandings or agreements between the parties
with respect to such matters. This Agreement, including all schedules hereto,
may only be amended, modified or supplemented by written agreement of all
parties to this Agreement.
(i) Further Assurances. The Members shall execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intent and purposes of this Agreement. Each Member shall execute
all such certificates and other documents and shall do all such filing,
recording, publishing, and other acts as the Members deem appropriate to comply
with the requirements of law for the formation and operation of the Company and
to comply with any laws, rules, and regulations relating to the acquisition,
operation, or holding of the property of the Company.
(j) Third Parties. Nothing in this Agreement, whether express or
implied, shall be construed to give any Person other than a Member or the
Company any legal or beneficial or other equitable right, remedy or claim under
or in respect of this Agreement, any covenant, condition, provision or agreement
contained herein or the property of Company.
(k) Facsimile Signatures. The facsimile signature of any Member may be
used at all times and for all purposes in place of an original signature.
(l) Reliance upon Books, Reports and Records. Unless he has knowledge
concerning the matter in question which makes his reliance unwarranted, each
Member shall,
18
in the performance of his duties hereunder, be entitled to rely on information,
opinions, reports or statements, including, without limitation, financial
statements and other financial data, if prepared or presented by one or more
employees of the Company or by legal counsel, accountants or other Persons as to
matters such Member reasonably believes to be within such Person's professional
or expert competence.
(m) Time Periods. In applying any provision of this Agreement which
requires that an act be done in or not done in a specified number of days prior
to an event or that an act be done during a period of a specified number of
days, calendar days shall be used, the day of the doing of the act shall be
excluded, and the day of the event shall be included.
(n) Waiver. No failure by any Member to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
19
IN WITNESS WHEREOF, the undersigned Members have executed this
Agreement as of the date first set forth above.
PROLOGIS TRUST
By: /s/ XXXXXX X. XXXXXXX
---------------------------
Xxxxxx X. Xxxxxxx
Senior Vice President
/s/ K. XXXX XXXXXXXXX
------------------------------------
K. Xxxx Xxxxxxxxx
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SCHEDULE I
MEMBERS
SOCIAL SECURITY
OR CAPITAL MEMBERSHIP
NAME AND ADDRESS TAXPAYER I.D. # CONTRIBUTION INTEREST
---------------- --------------- ------------ ----------
K. Xxxx Xxxxxxxxx.................... [intentionally omitted] $ 40,577.50 5.0%
c/o ProLogis Trust
00000 Xxxx 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
ProLogis Trust....................... 00-0000000 $770,972.50 95.0%
00000 Xxxx 00xx Xxxxx ----------- ----
Xxxxxx, Xxxxxxxx 00000
Total $811,550.00 100.0%
=========== ======
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